According to a new report from Bloomberg, Binance, the world’s largest cryptocurrency exchange, may sever ties with its partners in the US. CEO CZ has clarified Bloomberg’s claims in the past hours.
Can Binance end its US operations?
US regulators SEC and New York Department of Financial Services (NYDFS) recently banned the printing of Binance-branded stablecoin BUSD. After that, BUSD lost its price stability and experienced a significant drop in volume.
New allegations by Bloomberg suggest that Binance will cut off all ties to its US partners, including the company Circle, behind USDC to avoid damage. Responding to the FUD news surrounding Binance since day one, CZ soon denied these allegations on his Twitter account.
4. False. https://t.co/qjqLrx3TGF
— CZ 🔶 BNB (@cz_binance) February 17, 2023
Binance CEO CZ denies the news spread by Bloomberg’s claims. Recently, he replied to one of these news on his Twitter account as “wrong”. The related article reads, “Bloomberg report: Binance drops delisting of all US-based cryptocurrencies.”
“For now, we have withdrawn some potential investments or tenders to bankrupt companies in the US,” CZ said in another tweet. CZ, who also made a statement about the decrease in BUSD, which we quoted as Kriptokoin.com, emphasized again that the reserves are supported 1:1.
Bloomberg’s claims
Circle, the company behind USDC, warned NYDFS months ago that it was unable to maintain sufficient reserves for Binance’s issued tokens, according to Bloomberg. Allegedly, Circle’s move comes months before Paxos announced on Monday that it had terminated its relationship with Binance around BUSD at the behest of the New York regulator.
Circle’s warning claims that USDC is also under-collateralized by Binance from time to time. According to the source contacted by Bloomberg, Binance once supported $1.7 billion worth of USDC using only $100 million worth of real USDC as collateral.
–The recent sanctions action against BUSD could work in Circle’s favor, reversing the results of Binance’s game to delist a number of stablecoins, including USDC, in September. The delisted stablecoins continued to be backed by Binance, but would be automatically converted to BUSD when they reach the exchange. While Circle CEO Jeremy Allaire claimed it was good for USDC at the time, BUSD’s share of the stablecoin market has subsequently increased.
CZ confirms Binance will make product adjustments
This week, the US Securities and Exchange Commission (SEC) sued Paxos, the company authorized to print Pax Dollar (USDP) and Binance USD (BUSD), over BUSD and banned it from printing new BUSD. With BUSD starting to slow down, Binance had to change its stance towards stablecoins sent to its platform. CEO CZ confirmed that shortly after the decision, the company will make product adjustments, including moving away from BUSD:
Binance will continue to support BUSD for the foreseeable future. We anticipate users to migrate to other stablecoins over time. We will make product adjustments accordingly. Move away from using BUSD as the main pair for trading.
7/ Binance will continue to support BUSD for the foreseeable future. We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.
— CZ 🔶 BNB (@cz_binance) February 13, 2023
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